Saint-Gobain, other glassmakers fined by EU

Thursday

Nov 29, 2007 at 6:00 AM

By Matthew Newman BLOOMBERG NEWS

Cie. de Saint-Gobain SA, the world’s largest glassmaker, Guardian Industries Corp. and two competitors were fined a total of 487 million euros ($718 million) by European Union regulators for fixing the price of glass used in the construction industry.

The glass companies are being investigated in relation to two separate cartels for the construction and automotive industries. Saint-Gobain, which in the U.S. has operations in locations including Worcester, Northboro and Milford, said July 26 it set aside 650 million euros to cover possible EU fines in the cases. The fines yesterday concern only construction glass, in which the companies had sales of 1.7 billion euros in 2004, the EU said.

“It is right that the punishment in this case is severe in order to achieve a sufficient deterrent effect,” EU Competition Commissioner Neelie Kroes told journalists yesterday in Brussels. “It’s a great pity that the commission’s many previous cartel decisions didn’t deter those companies from forming a cartel.”

In mid-March, the commission accused Tokyo-based Nippon Sheet Glass Co.’s Pilkington subsidiary, Asahi Glass, Guardian and Saint-Gobain of conspiring to set the price of glass used in the construction industry for windows, glass doors and mirrors at a series of meetings from early 2004 to early 2005.

The Brussels-based European Commission has levied a record 3.09 billion euros in penalties in cartel cases this year, compared with 1.85 billion euros in 2006. The largest EU fine was a 992.3 million-euro levy in a February case involving four elevator makers, including Otis Elevator Co. and ThyssenKrupp AG.

Yesterday’s penalties are the fifth-highest in EU history, after cases against the elevator manufacturers and makers of vitamins, electrical gear and synthetic rubber.

Peter Walters, a vice president at Auburn Hills, Michigan-based Guardian Industries, said the privately held company is “shocked” by the fine and is considering an appeal to European Union courts in Luxembourg.

“We don’t know the basis of the fine,” he said. “We strongly believe that the facts don’t justify the fine.”

Sophie Chevallon, a spokeswoman for Paris-based Saint-Gobain, said the company took “concrete measures” to avoid further violations of antitrust rules and said that employees involved in the breaches are no longer in their positions.

Asahi’s Brussels-based AGC Flat Glass Europe unit said it cooperated with the EU for a fine reduction. The commission didn’t disclose the amount it cut Asahi’s fine.

“We applied for the leniency program and that’s how the fine was calculated,” Marie-Ange Dhondt, a spokeswoman for AGC Flat Glass, said.

David Roycroft, a spokesman for Pilkington in London, declined to comment. Shinichi Kawakami, Asahi’s spokesman in Tokyo, wasn’t immediately available to comment.

Several European companies, including Degussa AG and Bayer AG, have taken advantage of the EU leniency program to win reductions in fines. The first company that discloses cartel activity can receive full immunity.

Nippon Sheet Glass on May 22 said it set aside 350 million pounds ($722 million) for possible fines in Europe, which would include penalties for fixing the prices of construction glass and car windows.